The tagline of enterprise cloud solutions has generally revolved around two key benefits — business transformation and lower IT costs — but amidst the past few years of cloud hype, it can be difficult to extricate the hard facts from the haze of cloud computing buzzwords. How exactly does the cloud lighten the burden on IT, and where do these lower IT costs come from? What are the true benefits of business transformation, and how does that affect employee productivity and overall business growth?
A comprehensive study completed by Forrester Research in late 2014 explored the Total Economic Impact of Office 365, evaluating the costs and benefits of Microsoft cloud productivity in comparison to Microsoft’s comparable on-premise software to unravel the true value and ROI of implementing Microsoft’s cloud productivity tools. Forrester surveyed three customers who had used Office 365 for multiple years, conducted an online survey of 60 organizations using Office 365, and surveyed a composite organization that moved from an on-premise version to Office 365 in the cloud. From these use cases, they were able to analyze the ROI gained specific to each scenario. The *results are summarized below:
As per the image above, from an analysis of data collected, Forrester concluded that there was an ROI of 162% and an IRR of 468% from switching to Office 365. If this isn’t reason enough to make you switch, the three-year benefits average $8.8 million with a net present value per user at $1,348 and a payback period of 7 months.
Forrester’s evaluation analyzed business and IT benefits over five areas: Technology, Mobility, Control and Compliance, Business Intelligence, and Enterprise Social. This comprehensive survey was designed to target the true business value of using Microsoft’s suite of cloud-based products (Office 365 – Exchange Online, SharePoint Online, Lync Online, and Yammer) as opposed to on-premise Microsoft Office tools.
On the technology front, Forrester reported that companies experienced a significant reduction in support and licensing costs as well as marked improvement in IT security.
11.9% less IT support costs for legacy systems required
11.2% less Microsoft licensing costs
9.4% less procurement and third-party software license costs
Companies reported that Office 365 met all of their business needs — it served as a comprehensive business solution that didn’t need to be bolstered by third-party software and required much less management from the IT team because updates occurred automatically. This reduced costs and saved time. The Office 365 also included enterprise-grade security, access to the latest versions of Microsoft technologies, and additional collaboration benefits with the ability to access information and work through a browser or on any device.
After a cost – benefit analysis of responses gathered, Forrester identified four major benefit areas within technology: avoiding back-end hardware, avoiding Microsoft server licenses, reduced implementation efforts, and reduced IT support effort.
One of the main priorities of companies that moved to Microsoft cloud-based applications was mobility, even for companies that didn’t necessarily maintain a mobile workforce.
42% of companies saw an increase in worker productivity
38% reported happier employees because of bring-your-own-device (BYOD) policies
33% reported less user downtime
Organizations saw a strong increase in employee engagement and effectiveness, many seeing accelerated workflows and streamlined operations due to the fact that employees were no longer limited to using their office computer to communicate professionally and access the information they needed to keep business moving forward. Companies no longer have to create remote work spaces since employees have the ability to work from home, which saves the company time and cuts costs.
Mobility not only leads to increased employee engagement and effectiveness, but also reduces office costs. To prove this, Forrester created a financial analysis of the productivity of highly mobile employees, and found that they saved 1 hour per day by year 3 of implementing Office 365 in the cloud.
Control, Compliance and Security ROI
Companies articulated that control and security were the two primary concerns with moving to the cloud. These issues, were actually improved by leveraging the cloud to improve security and access, as well as reduce costs. As a result of the study, Forrester found that companies reported:
6.8% reduced compliance costs
10.7% less time spent on eDiscovery efforts
73% reduction in data breaches
32% decrease in the cost of data breaches
Regarding security, companies not only saved on security software due to the enterprise-grade security built in to Office 365, but saw a huge decrease in data breaches overall.
Regarding regulatory, eDiscovery, audit and policy management compliance, companies reported overall time and cost savings due to the ease of organizing and managing information in Office 365.
One-third of companies surveyed reported being able to retire other systems used for control and compliance, and the remaining third reported lower costs because of best practices built into Office 365.
By using Office 365, the composite company was able to reduce costs by eliminating the need to undertake four projects that would have been necessary had they still been using the on-premise version. Cost savings isn’t the only benefit, however, Microsoft recently made security and compliance a priority.
Business Intelligence ROI
Business Intelligence, especially in the past few years, has become a vital source for competitive advantage. The role of “big data” and its ability to drive effective business decision-making will become increasingly important and more sophisticated in the cloud.
45% reported improvement in employee performance due to anytime, anywhere access to information
28% reported corporate knowledge improvements, because information is no longer “lost” on local systems
Nearly all reported system uptimes of nearly 100%
Hosting data in the cloud means that not only is it in a centralized location and essentially always available from anywhere, but the power of cloud computing facilitates advanced analytics that provide valuable, real-time business intelligence. Since data is reported in real-time, employees are able to make faster and better decisions due to more accurate and timely information. The best example of this is Microsoft Power BI, which provides deep insights and dynamic data visualizations to help organizations peer right into the heart of the business in order to make well-informed business decisions.
Forrester found that by Year 3, employees save approximately 30 minutes per day, which allows employees to complete additional work and reduce the need for new hires.
Enterprise Social ROI
As technology has allowed people to stay closely connected through online social interaction in their personal lives, workplace communication has also shifted to a more collaborative, social-driven environment. To support this new way of working, Microsoft has designed tools that improve knowledge sharing, collaboration, and productivity through social interaction.
10% reported increased overall productivity due to social components that allow knowledge sharing
Improved collaboration with Yammer, increase in knowledge sharing
Companies reported that Office 365’s communication tools, particularly Lync and Yammer, have added value to their organizations by facilitating both internal and external communication across the board, resulting in a significant increase in productivity and more informed ways of working. Another collaboration tool that companies have found to add value is SharePoint. Also, businesses have saved money by eliminating other social, collaboration and web conferencing solutions in favor of the tools built in to Office 365.
*All statistics and results taken from the full case study by Forrester Research: “The Total Economic Impact of Microsoft Office 365 – Enterprise Customers, October, 2014.”
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